In Brief: Betting on America; Iran uncertainty and “No poach” pacts

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Betting on America

As the Global Gaming Expo began in Macau on May 15, all eyes were on the U.S. in the wake of the Supreme Court ruling a day earlier that struck down the Professional and Amateur Sports Protection Act (PASPA) of 1992.

PASPA effectively outlawed betting on the outcome of sporting events throughout the U.S., except in Nevada, which was grandfathered in, and limited betting in Delaware, Montana and Oregon. The May 14 ruling means that each individual state is now free to establish its own regulated sports betting.

The global gambling industry is galvanized because the US$150 billion a year estimated to go to illegal betting will be legalized, regulated and taxed. New Jersey plans to ready a state sports-betting framework within weeks, while Pennsylvania, Michigan, Mississippi and the District of Columbia are among other jurisdictions raring to go.

The ruling has international ramifications. British and Australian gambling companies are expected to provide key personnel to the U.S. operators and win a slice of the contracts needed to crank up the industry, while much of the necessary hardware is manufactured in China.

However, the decision raises as many variables as horses in a race, say analysts. The Supreme Court didn’t legalize sports betting in all 50 states; it simply cleared the way for states to make their own policies. How many states will choose to regulate sports betting is unknown. How much power incumbent casino operators will wield also remains to be seen, notes David Jennings, an analyst with Davy Research in Dublin.

“Regulating sports betting in certain states may prove to be more complex than some people think,” he said. “We envisage the U.S. market resembling the Australian market…with operators being charged a combination of betting taxes and product fees, which will go to the sports leagues.”

Iran: who protects whom?

The U.S. government’s decision to pull out of the Joint Comprehensive Plan of Action (JCPOA) with Iran means re-imposing the sanctions lifted under the deal.

While many U.S. entities – from GE Healthcare to Harvard University – are already in the country under licenses granted by Washington, analysts say the big question mark is what the U.S. government might do to non-U.S. companies that continue to work with Iran.

“European governments may urge their companies not to pull out of Iran, so that the Iranians feel as if they are still seeing the benefits of the JCPOA,” said Janet Kim, a partner at the Baker McKenzie law firm in Washington. “But companies will want to know what their governments can do to protect them from secondary sanctions by the U.S.”

Tide turns on no-poaching pacts

Non-competition and non-solicitation agreements are commonplace in U.S. employment contracts. They are designed to protect a company’s intellectual property, trade secrets and key customers from being acquired by departing employees for use at a competitor. Such agreements are typically enforceable and are assessed under state law.

But the U.S. Justice Department is cracking down on agreements with wider application. It reached a settlement with Knorr-Bremse and Westinghouse Air Brake Technologies Corporation (Wabtec), two of the world’s largest rail equipment suppliers, to resolve a lawsuit alleging that the companies maintained unlawful agreements not to compete for each other’s employees.  

Knorr and Wabtec reached sweeping “no-poach” agreements not to solicit, recruit, hire without prior approval, or otherwise compete with one another for employees, according to the DoJ complaint.

Such agreements “are primarily designed with and motivated solely by a desire to not lose highly trained employees”, noted Michael M. Briley, a partner at the Shumaker Loop & Kendrick law firm in Toledo. “As such, they enjoy much less policy approval by courts and juries.”